The “positive” jobs report shows weakness

The Labor Department released their Employment Situation Report for April. Here are the details:

  • Month/Month non-farm payrolls increased by 288,000
  • The unemployment rate shrank from 6.7% to 6.3%
  • 800,000 people were removed from the labor force
  • the labor participation rate is 62% – the lowest since 1978
  • the average work week was unchanged at only 34.5 hours

The unemployment was lowered because the divisor, the size of the workforce, shrank; not because of a big increase in full-time jobs. The vast majority of the increase in payroll jobs had to be part-time jobs. Otherwise, the average work week would have improved. But, it was unchanged (and very low). This means that many full-time workers loss their jobs and were replaced by a larger number of part-time jobs such that the net hours worked was a wash. The weakness shown under the covers of this report mirrors the sluggish 0.1% GDP growth reported last week.

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